Analysis on the Waste Management Fraud. Accounting, Finance, SPSS (Term Paper Sample)

Analy1sis on the Waste Management’s Fraud
Author
Institution of Affiliation
Analysis on The Waste Management’s Fraud Waste Management
The Effectiveness of Netting in Waste Management’s Team in trying to cover up Fraudulent Activity:
The company used netting to offset unrelated expenses and accounting misstatements that had accumulated over time. For instance, if Waste Management had a contract with Company X to provide trucks for the collection and disposal of waste while Company X also provided similar services to other companies but used Waste Management’s Landfills to dispose off waste. So both companies shared accounts receivables and payables. The netting malpractice of the firm was that if Waste Management had a $100,000 contract with Company X to provide the collection disposal services and Company X had a $40,000 contract with Waste Management to carry out similar services with its clients, then Waste Management needed to pay the difference of $60,000 to Company X. However, Waste Management would use a one time gain to clear such expenses leaving gaps on real profits gained. So if the company sold one of its machines for $60,000 to clear the balance it would mean there would neither be a reflection of a loss in assets nor a gain in the financial statement. In this case, in regards to auditing standards paragraph 7 there would be an importance of obtaining more evidence to corroborate the management representations of such practices to ensure professional scepticism and to employ any pervasive changes needed in modifying the auditing strategy.